Well, it finally happened. After years of outstanding growth, Apple Inc. (NASDAQ: AAPL) was forced to lower guidance in front of earnings for the first time since 2007. In addition, the company is expected to sell the fewest phones since 2015. The tech giant was battered in Thursday’s trading, and following some soft economic data, the rest of the market followed.
Apple’s revenues from China fell 27% year over year in the fourth quarter, a massive reversal from the 20% growth seen there in fiscal 2018. Economic nationalism and the Chinese economy are seen as the problem, and the results also suggest Apple’s price hike strategy could encounter similar push-back in other regions.
Apple shareholders are not the only investors to get scorched here. The suppliers for the company are also taking a big hit. We decided to screen the Merrill Lynch technology research database for tech stocks that are Buy rated that have little if any exposure to Apple. We found four that look like solid picks for aggressive accounts.
This high-profile old-school software company has been posting outstanding earnings. Adobe Systems Inc. (NASDAQ: ADBE) operates in three segments. The Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote and monetize their digital content. The other segments are Digital Marketing and Print and Publishing.
Top Wall Street analysts see the company benefiting from artificial intelligence, predictive analytics, automation bots, speech recognition and natural language processing and image recognition. Some on Wall Street see earnings per share increasing a solid 30% or more.
Merrill Lynch feels the company deserves a premium multiple to its peers due to Adobe’s strong competitive position in the creative space and above-average growth prospects. The company posted solid results in December, but it still got caught up in the across-the-board fourth-quarter selling.
The Merrill Lynch price target for the shares is $309, and the Wall Street consensus target is $290.04. The shares closed Thursday’s trading at $215.70, down almost 4% on the day.
This top mega-cap technology company recently reported an outstanding quarter. Cisco Systems Inc. (NASDAQ: CSCO) designs, manufactures and sells internet protocol (IP) based networking products and services related to the communications and information technology industry worldwide.
It provides switching products, including fixed-configuration and modular switches, and storage products that provide connectivity to end users, workstations, IP phones, wireless access points and servers, as well as next-generation network routing products that interconnect public and private wireline and mobile networks for mobile, data, voice and video applications.
The company recently released 400G switches that allow customers to create more powerful networks more cost-effectively and in a fraction of the space. They provide four times the bandwidth and four times the scale of existing switches without using four times the power. And since the new switches are built on Cisco’s leading Nexus portfolio, customers can choose to deploy 400G in the way that best meets their needs. They can be used on their own or in combination with Cisco’s leading security, automation, visibility and analytics software.
Cisco posted solid numbers in November, and the stock has acted well all year long. Toss in the continuation of a massive $25 billion share buyback plan, and investors should be well rewarded going forward.
Cisco shareholders are paid a solid 3.21% dividend. Merrill Lynch has a target price of $53, while the posted consensus target is $52.76. The stock closed at $41.07 a share on Thursday.